How government austerity is squeezing smaller arts groups

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Could the golden age of the small-to-medium arts company be coming to an end?

Hard-pressed arts managers will shake their heads in disbelief and ask if it ever arrived. But the truth is that, in funding terms, the last decade or so has been one of the best times to work in a smaller performing arts company since the 1970s.

Funding has been relatively stable. With the big increase in Commonwealth funding to the small-to-medium performing arts organisations delivered by George Brandis at the end of the Howard government, smaller performing arts companies finally enjoyed a base funding increase, money that has largely been maintained through the Rudd and Gillard years. State governments also came to the party, increasing funding for the small-to-medium sector in most jurisdictions in the years before 2010. As a result of this healthy investment from most of the states and territories, smaller arts companies have proliferated and grown in recent years.

There is now a substantial strata of these smaller companies occupying a middle tier of the arts ecology, between the large state-run institutions and the grassroots of artists-run initiatives and solo artists. The Australia Council funds about 140 of them (OzCo calls them “key organisations”) on an ongoing basis.

The small-to-mediums are the backbone of the performing arts in Australia. They make a lot of work: collectively, they produce more performances than the major performing arts sector. The table below, taken from the Australia Council’s 2010 report on organisations, shows just how important the small-to-medium sector is. The 140-odd smaller companies tracked produce more work than the majors, generally on much smaller budgets and with far less marketing, advertising and promotional support.

Exactly why these companies are called “small-to-medium”, by the way, is one of the mysteries of the sector. Most turn over less than $2 million a year, the threshold the Australian Taxation Office considers a “micro-business”. Organisations that the arts calls “medium-sized” are in fact small in any objective sense of the word. Nearly all of them are run on the proverbial smell of the oily rag, with perhaps three or four full-time administrative staff.

This diminutive scale makes many small arts companies vulnerable to the slings and arrows of artistic fortune. They have few assets and little in the way of cash reserves. If the funding disappears, most can’t survive in the long term. In recent weeks, we’ve seen Fremantle-based Deckhair Theatre wind up after 30 years of independent production, and Adelaide choreographer Leigh Warren “go freelance” to keep his dance studio afloat. Both companies have been defunded in recent years.

The problem for the small-to-medium sector is that the funding appears to be drying up. With the Australia Council getting squeezed by the federal government’s efficiency dividend, Commonwealth funding is actually falling in real terms. Nor is any extra pot of gold awaiting beneath an unexpected rainbow. Arts Minister Simon Crean appears to have conceded that he can’t get the National Cultural Policy up this year.

The Victorian cuts are the best indicators of the broader trend, because that state has long had the most sophisticated policy understanding of the role of the small-to-medium sector. Arts Victoria funds more than 100 smaller organisations, many of which aren’t getting anything from the Australia Council. With an arts-friendly Premier in Ted Ballieu, some in the sector were hoping arts would be quarantined from the government’s broader cost-cutting efforts. In the end, Arts Victoria imposed an across-the-board haircut of about 3.5%.

What’s driving this uncertainty? Money. States and territories are pretty much at the limit of their revenue growth currently. Lower-than-expected GST revenue has hurt finances and there is little appetite to raise state levies like payroll tax or stamp duty. As a result, state government spending is going to be constrained. State arts agencies will have to make do with less in coming budgets. While there might be some headline funding growth, in real terms the grant dollars seem set to shrink.

Because of this, arts organisations reliant on state and territory funding are going to face real challenges in coming years. The states have big statutory responsibilities running large art galleries, libraries and performing arts centres. These major institutions are much better established, more visible and better connected than the smaller companies on year-to-year funding contracts. They also have more fat in their budgets. In Queensland’s recent cuts, for instance, the big institutions fared much better than smaller groups. Even an across-the-board cut like Victoria’s this year still hurts the smaller guys hardest, if only because they are more precarious to start with.

Taken together, these trends don’t auger well. Smaller arts companies are going to face a much more difficult funding environment in coming years. Unless they can grow their own revenues, we’ll see more closures like Deckchair Theatre.

Much as it would be sad to see the inevitable closures that would result, it is reasonable to ask just how much of taxpayers’ money is it justified to put towards supporting organizations with such a limited outreach (and yes, of course there are far more questionable uses of public funds). I think there’s a decent argument for HECS/HELP type loans (i.e. ones that you don’t need to pay off until a certain level of income stream is established) for arts organizations – in fact I’d go so far as to suggest ALL government grants that go to organizations expected to continue functioning for at least 10 years could be done this way.